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Implicit Contracts

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Abstract

An implicit contract is a theoretical construct meant to describe complex agreements, written and tacit, between employers and employees, which govern the exchange of labour services when various types of job-specific investments inhibit labour mobility and opportunities to shed risk are limited by imperfectly developed markets for contingent claims. This construct differs from the more familiar one of a neoclassical labour exchange in emphasizing a trading process, frequently over a long period of time, between two specific economic units (say a worker and a firm, union and management, and so on) rather than the impersonal, and often instantaneous, market process in which wages decentralize and coordinate the actions of labour suppliers and labour demanders.

This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume

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  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Costas Azariadis

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  1. Costas Azariadis
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    Azariadis, C. (2008). Implicit Contracts. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_1180-2

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    • DOI: https://doi.org/10.1057/978-1-349-95121-5_1180-2

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    • Publisher Name: Palgrave Macmillan, London

    • Online ISBN: 978-1-349-95121-5

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    Chapter history

    1. Latest

      Implicit Contracts
      Published:
      14 March 2017

      DOI: https://doi.org/10.1057/978-1-349-95121-5_1180-2

    2. Original

      Implicit Contracts
      Published:
      31 October 2016

      DOI: https://doi.org/10.1057/978-1-349-95121-5_1180-1

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